The China Labor Contract Law has already greatly impacted both the treatment of employees in China and how these employees view their rights. Before the enactment of the Labor Contract Law, employee abuse was rampant in China and labor relations were worsening. Labor disputes in China increased more than thirteen-fold between 1995 and 2006, and a growing number of these disputes erupted into public demonstrations. Most Chinese labor law experts viewed the existing labor laws and regulations as inadequate for solving employer-employee disputes and considered employees to lack basic legal protection. The Labor Contract Law was designed to give employees greater rights and easier enforcement of those rights so as to achieve the ultimate social policy of creating and sustaining a "harmonious society." Labor Contract Law gives workers a private right of action to enforce their own legal rights. In other words, employees may now sue their employers directly, without the aid of the state. Chinese labor departments and agencies may still assign administrative penalties for labor law violations, but granting a cause of action to Chinese employees has greatly minimized the role of the state in the employer-employee relationship and greatly increased the power of Chinese employees to handle their employment grievances independently.
Since last year, labor disputes have increased by 126% in Shenzhen, 132% in Dongguan and 92% in the Guangzhou’s District People's Court. This increase in labor law cases demonstrates both that Chinese workers are aware of their new rights under the Labor Contract Law and that they perceive themselves as having new rights worth enforcing.
On a micro level, the new law has changed the way nearly every company does business in China. Smart companies in China now use written employment contracts, in Chinese, with all of their employees and maintain a written policy manual, also in Chinese, explicitly setting forth the various bases for employee termination. The written contract is necessary to avoid potentially huge penalties and the policy manual setting forth grounds for termination helps prevent the potential of having to retain lifetime employees.
The Labor Contract Law has also carved out a bigger and more defined role for Chinese labor unions and the unions are beginning to act on that. Despite all the changes brought about by the Labor Contract Law and all the changes to come from that new law, Chinese employee rights are still lacking as compared to the West. But China's efforts to move away from being a destination for foreign companies seeking extremely low paid workers will inexorably continue. China wants to improve its labor relations in a way that minimizes disruption, and will continue to move towards granting workers greater rights and increasing unionization. However, these moves will come incrementally rather than in big leaps.
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